Hire in Hong Kong through our Employer of Record (EOR)

An Employer of Record (EOR) is a third-party organization that takes on the legal and administrative responsibilities of employing workers on behalf of another company. This arrangement allows businesses to hire employees in countries where they don't have a legal entity, effectively expanding their global reach without the need to establish a local subsidiary or branch office.

In the context of Hong Kong, an EOR can be particularly useful for international companies looking to tap into the region's vibrant economy and skilled workforce. By partnering with an EOR, businesses can navigate Hong Kong's unique legal and regulatory landscape more easily, while focusing on their core operations and growth strategies.

How Does EOR Work?

When a company decides to use an EOR service in Hong Kong, the process typically unfolds as follows:

1. The client company identifies a candidate they wish to hire in Hong Kong.
2. The EOR becomes the legal employer of the worker, handling all employment-related paperwork and compliance.
3. The EOR manages payroll, tax withholding, and benefits administration for the employee.
4. The client company maintains day-to-day management and direction of the employee's work.
5. The EOR ensures ongoing compliance with Hong Kong's labor laws, tax regulations, and other relevant legislation.

This arrangement allows the client company to quickly and compliantly employ workers in Hong Kong without establishing a local entity or navigating complex legal requirements on their own.

Benefits of Using an EOR

Utilizing an EOR in Hong Kong offers several advantages for businesses:

1. Rapid market entry: Companies can hire employees in Hong Kong quickly without the need to set up a local entity, which can be a time-consuming and costly process.

2. Compliance assurance: EORs are well-versed in Hong Kong's labor laws, tax regulations, and other legal requirements, ensuring that the client company remains compliant with local regulations.

3. Risk mitigation: By taking on the legal responsibilities of employment, EORs help shield client companies from potential legal issues related to employment in Hong Kong.

4. Cost-effectiveness: Using an EOR can be more economical than establishing and maintaining a local subsidiary, especially for companies with a small presence in Hong Kong.

5. Flexibility: EORs allow companies to scale their operations in Hong Kong up or down more easily, without the long-term commitments associated with maintaining a local entity.

6. Local expertise: EORs provide valuable insights into Hong Kong's business culture, employment practices, and market conditions, which can be beneficial for foreign companies.

7. Focus on core business: By outsourcing employment-related administrative tasks to an EOR, companies can concentrate on their primary business objectives and growth strategies in Hong Kong.

In conclusion, an Employer of Record service can be a valuable tool for companies looking to expand their operations into Hong Kong. By leveraging the expertise and infrastructure of an EOR, businesses can navigate the complexities of Hong Kong's unique business environment more efficiently, while minimizing risks and maximizing opportunities in this dynamic market.

Hong Kong's employment landscape is a dynamic blend of traditional values and modern practices, shaped by its unique position as a global financial hub and gateway to mainland China. The city's workforce is highly educated, predominantly service-oriented, and known for its strong work ethic. However, it faces challenges such as an aging population and the need to maintain competitiveness in a rapidly evolving global economy.

Overview of Labor Laws

Hong Kong's labor laws provide a comprehensive framework to protect both employees and employers. The Employment Ordinance is the primary legislation governing employment relationships, covering areas such as wage protection, rest days, holidays, and termination of employment. Other key laws include the Minimum Wage Ordinance, which sets a statutory minimum wage, and the Employees' Compensation Ordinance, which provides for a no-fault, non-contributory employee compensation system for work-related injuries.

The city also has laws addressing discrimination in the workplace, including the Sex Discrimination Ordinance, Disability Discrimination Ordinance, and Race Discrimination Ordinance. These laws aim to ensure equal opportunities and fair treatment for all workers.

Cultural Considerations

Understanding Hong Kong's unique work culture is crucial for successful employment relationships. The city's workforce is known for its strong work ethic, often resulting in long working hours. However, there's a growing emphasis on work-life balance, particularly among younger generations.

Communication in Hong Kong workplaces tends to be more direct than in some other Asian cultures, but it's still balanced with politeness and respect for hierarchy. Multilingual skills, particularly in English, Cantonese, and Mandarin, are highly valued.

The concept of 'guanxi' (relationship-building) remains relevant in some circles, though its importance is declining in more international and modern workplaces. Hong Kong's work culture is a unique blend of traditional Chinese values and Western business practices, reflecting the city's cosmopolitan nature.

Challenges of Direct Hiring

Direct hiring in Hong Kong can present several challenges for foreign companies. One of the primary difficulties is navigating the complex labor laws and regulations, which can be significantly different from those in other countries. Ensuring compliance with these laws requires in-depth local knowledge and often legal expertise.

Another challenge is understanding and adapting to the local work culture. The expectations and norms in Hong Kong workplaces may differ from what foreign companies are accustomed to, potentially leading to misunderstandings or conflicts if not properly managed.

Recruitment can also be challenging, particularly for high-skilled positions. Hong Kong faces strong competition for top talent from other Asian hubs like Singapore and major Chinese cities. Attracting and retaining the right employees often requires competitive compensation packages and an understanding of local market rates.

Additionally, setting up a legal entity in Hong Kong to directly hire employees can be a complex and time-consuming process. It involves various administrative procedures, including company registration, tax registration, and setting up mandatory employee benefits such as the Mandatory Provident Fund (MPF).

These challenges highlight why many foreign companies choose to work with an Employer of Record (EOR) like Rivermate when expanding into Hong Kong. An EOR can handle the complexities of local employment laws, payroll, and benefits administration, allowing companies to focus on their core business operations while ensuring compliance with local regulations.

Hong Kong's payroll and tax system is known for its simplicity and low tax rates, making it an attractive destination for businesses and employees alike. The city operates on a territorial basis, meaning that only income derived from or arising in Hong Kong is subject to tax. This system is designed to encourage economic growth and maintain Hong Kong's status as a global financial hub.

In Hong Kong, both employers and employees have specific responsibilities when it comes to payroll and taxes. The system is structured to ensure fair contributions from both parties while maintaining a competitive business environment. Let's delve into the details of employer and employee contributions in Hong Kong.

Employer Contributions

Employers in Hong Kong are required to make several contributions on behalf of their employees. These contributions are essential for maintaining social welfare systems and ensuring employee benefits.

Mandatory Provident Fund (MPF)

The MPF is a compulsory retirement savings scheme. Employers must contribute 5% of an employee's relevant income to their MPF account, up to a maximum of HKD 1,500 per month. This applies to employees aged 18 to 64 who have been employed for 60 days or more.

Employee's Compensation Insurance

Employers are legally required to take out insurance to cover their liabilities in case of work-related injuries or fatalities. The premium for this insurance is entirely borne by the employer.

Reporting and Record-Keeping

Employers must file an Employer's Return (Forms BIR56A and IR56B) annually with the Inland Revenue Department (IRD), reporting the total remuneration paid to each employee. They must also notify the IRD about new employments, terminations, and employees leaving Hong Kong.

Payroll Tax

Unlike many other countries, Hong Kong does not have a Pay-As-You-Earn (PAYE) system. Employers are not required to withhold taxes from employees' salaries. However, they must keep accurate payroll records for each employee, including details of salary, bonuses, allowances, and mandatory contributions.

Employee Contributions

Employees in Hong Kong also have tax obligations and contribution requirements. However, the system is designed to be relatively straightforward and less burdensome compared to many other jurisdictions.

Salaries Tax

Employees are responsible for paying Salaries Tax on their Hong Kong-sourced income. The tax is calculated on a progressive rate system, with rates ranging from 2% to 17%, or at a standard rate of 15%, whichever results in a lower tax burden. Employees must file their own tax returns annually.

Mandatory Provident Fund (MPF)

Like employers, employees must also contribute 5% of their relevant income to their MPF account, up to a maximum of HKD 1,500 per month. This contribution is deducted from their salary.

Tax Deductions

Employees can claim various tax deductions to reduce their taxable income. These include:

1. MPF contributions (up to HKD 18,000 per year)
2. Self-education expenses (up to HKD 100,000 per year)
3. Charitable donations
4. Home loan interest
5. Elderly residential care expenses

Voluntary Health Insurance Scheme (VHIS)

Employees who purchase VHIS policies can claim tax deductions for the premiums paid, up to HKD 8,000 per insured person per year.

Understanding the payroll and tax system in Hong Kong is crucial for both employers and employees to ensure compliance and maximize benefits. While the system is relatively straightforward, it's always advisable to consult with tax professionals or the Inland Revenue Department for the most up-to-date information and guidance on specific situations.

Hong Kong offers a comprehensive benefits package for employees, combining mandatory benefits required by law with optional perks that employers can provide to enhance their workforce's well-being and job satisfaction. As an Employer of Record (EOR), Rivermate expertly manages these benefits, ensuring compliance with local regulations while helping companies attract and retain top talent. By handling the complexities of benefits administration, an EOR allows businesses to focus on their core operations while providing their employees with a competitive and attractive benefits package.

Mandatory Benefits

• Mandatory Provident Fund (MPF): A compulsory retirement savings scheme for employees aged 18-65
• Paid Annual Leave: Ranging from 7 to 14 days, depending on years of service
• Statutory Holidays: Eight paid holidays per year
• Sick Leave: Two paid sick days per month, accumulating to a maximum of 12 days annually
• Weekly Rest Day: One rest day per week, typically on Sundays
• Severance Payment: For employees terminated due to redundancy or reasons not related to misconduct
• Long Service Payment: A one-off payment for long-serving employees upon termination or retirement

Optional Benefits

• Employer-Sponsored Health Insurance: Coverage for medical expenses, including hospitalization and doctor visits
• Dental and Vision Insurance: Supplementary plans to cover dental care and eye examinations
• Flexible Work Arrangements: Options such as flexible hours, compressed workweeks, or telecommuting
• Allowances:
  • Housing Allowance
  • Transportation Allowance
  • Meal Allowance
• Employee Assistance Programs (EAPs): Confidential counseling and support services
• Extended Maternity/Paternity Leave: Beyond the statutory minimum
• Wellness Programs: Gym memberships, fitness classes, or healthy food options
• Social and Recreational Activities: Team-building events and gatherings to boost morale

By offering a mix of mandatory and optional benefits, employers in Hong Kong can create a comprehensive package that supports their employees' well-being and contributes to a positive work environment. As an EOR, Rivermate ensures that all mandatory benefits are properly administered while helping companies implement optional benefits that align with their organizational goals and employee needs.

The process of termination and offboarding in Hong Kong involves several important steps and considerations. Understanding these procedures is crucial for both employers and employees to ensure compliance with local labor laws and maintain a smooth transition.

When it comes to terminating employment in Hong Kong, employers must adhere to specific legal requirements. The most common method is termination with notice or payment in lieu of notice. This approach allows employers to end an employment contract by providing the required notice period or offering a payment equivalent to the notice period's wages.

In some cases, summary dismissal may be necessary. This occurs when an employee commits serious misconduct, such as willful disobedience, fraud, or habitual neglect of duties. In such instances, employers can terminate employment without notice or payment in lieu.

Notice Requirements

The notice period for termination varies depending on the employee's length of service and the terms specified in their employment contract. During the probationary period, shorter notice periods typically apply. For employees who have completed their probation, the standard notice period is:

• 7 days for those with less than one month of service
• One month for those with one month of service or more

It's important to note that employers can choose to make a payment in lieu of notice instead of having the employee work through the notice period.

Severance Pay

In certain situations, employees may be entitled to severance pay. This applies when:

1. The employee has been employed under a continuous contract for at least two years
2. The dismissal is due to redundancy or business closure

Severance pay is calculated as two-thirds of the employee's last monthly wage, multiplied by their years of service, with a maximum statutory limit of HK$390,000.

Offboarding Process

The offboarding process in Hong Kong typically involves the following steps:

1. Communicating the termination decision to the employee
2. Providing the required notice or payment in lieu
3. Calculating and processing final payments, including any severance pay if applicable
4. Retrieving company property and revoking access to systems
5. Conducting an exit interview (optional but recommended)
6. Issuing necessary documentation, such as a certificate of service

Important Considerations

Employers should be aware of the concept of constructive dismissal, where an employee resigns due to a substantial breach of contract by the employer. In such cases, the employee may be entitled to severance pay or other remedies.

Additionally, it's crucial to ensure that terminations are not based on unlawful grounds, such as pregnancy, illness, or trade union membership, as these would be considered unfair dismissal.

By following these guidelines and understanding the legal requirements, employers in Hong Kong can navigate the termination and offboarding process effectively while minimizing potential disputes and legal issues.

Hong Kong is a vibrant international hub that attracts talent from around the world. For foreign workers looking to work in this dynamic city, understanding the visa and work permit requirements is crucial. Here's a concise overview of what you need to know:

Types of Work Visas

General Employment Policy (GEP)

This is the most common work visa for skilled professionals. It's suitable for those with a job offer from a Hong Kong employer and who possess skills, knowledge, or experience not readily available locally.

Technology Talent Admission Scheme (TechTAS)

Designed for technology companies and startups, this scheme offers a fast-track arrangement for eligible tech talent.

Quality Migrant Admission Scheme (QMAS)

This points-based system is for highly skilled or talented individuals who wish to settle in Hong Kong without a prior job offer.

Application Process

1. Secure a job offer from a Hong Kong employer
2. Employer submits visa application on your behalf
3. Provide necessary documents (passport, educational qualifications, work experience proof)
4. Wait for processing (typically 4-6 weeks)
5. Upon approval, collect visa from nearest Chinese embassy or consulate

Key Requirements

• Valid passport
• Clean criminal record
• Relevant qualifications and work experience
• Proof of employment (offer letter, contract)
• Employer must demonstrate inability to find local talent for the position

Duration and Renewal

Initial visas are usually granted for 12-24 months. Renewals can be applied for before expiration, typically granted in 2-3 year increments.

Dependents

Spouse and unmarried children under 18 may be eligible for dependent visas.

Understanding these requirements will help smooth your transition to working in Hong Kong. Remember, regulations can change, so always check with the Hong Kong Immigration Department for the most up-to-date information.